Leasing Pitfalls

Unlucky 13 Leasing Pitfalls To Be Aware Of :

1. Lemon Laws don't apply to leased vehicles in most states. 

2. You are required to maintain the car that you do not own. You must pay for all maintenance (oil changes, tune-ups, brakes, tires, hoses) and non-warranty repairs for a car .

3. Make sure to add sales tax onto advertised lease payments.  The lease payments they quote you may not include sales tax. If not, then the sales tax will be added to each monthly payment. Most states tax your monthly payment. But some states reportedly tax the full amount of the car even though you are only using up 50% of the value then returning it.  Double check the current sales tax situation if you live in Illinois or Texas. 

4. All 4 tires on the vehicle must match when you return it. You will be charged list price to replace a set of mismatched tires.  This could add $600 or more to your termination (vehicle return) fee, which may be a few hundred dollars.

5. You will be charged ten to fifteen cents for every mile you drive over a pre-set limit, usually 12,000 to 15,000 miles per year. If you drive more than 15,000 miles a year, don't lease.

6. Leases are difficult and expensive to terminate early.  The penalties are stiff, and there's no way to avoid them.

7. Your lease payments may not be that much lower than if you bought the car, especially on a longer lease.  Whatever advantages may be gained from leasing are lost when the term extends to four or five years.

8. Take it for granted that the savings will not be as great as the salesman will lead you to believe. 

9. You may have to get expensive auto insurance. Some lenders require you to purchase comprehensive and collision insurance with a $0 deductible. Higher liability limits may also be required.  Check with your insurance agent before you lease.  

10. If you get in an accident, your collision insurance (mandatory) will cover the repairs, but not your lease payments, taxes, or fees. If the vehicle is totaled, you'll need gap insurance in order to be able to pay off the lease and the residual value of the vehicle.  Read your contract carefully, as your obligations will vary from contract to contract.

11. If you move to another state, be prepared to pay some of your acquisition fees all over again. At a minimum, new tags, registration, and insurance will be needed.  Some states might require you to repay a portion of the sales tax your already paid in another state.  See what the rules are before you consider moving with a leased vehicle.  

12.  Most contracts prohibit you from leaving the country, and some prohibit you from leaving the state that the vehicle is leased in.

13. With most loans the sales tax is added on to each month's lease payment. However if you live in Illinois or Texas, you may be taxed on the total amount of the capitalized cost, or purchase price of the vehicle.

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